How Can Smart Food Manufacturers Overcome Food Supply Chain Disruptions?
COVID-19 has disrupted the global food supply chain in ways no one could have anticipated. Right from farms (inability to harvest on time) to logistics (border and freight restrictions), processing (closed or scaled-down plants) to sourcing and go-to-market — no aspect of the food supply chain has been spared. Continuing climate emergencies like the recent floods in British Columbia and armed conflicts only compound food supply management challenges.
In their report from October, the Food, Health & Consumer Products of Canada (FHCP) found that labor shortages, limited and expensive ingredients, and the high cost of packaging and transportation were the main factors disrupting the supply of products in the country. Though the USDA indicates that there is currently no widespread disruption in the food supply chain, commodities like aluminum for products like canned goods are in short supply and some prominent manufacturers such as General Mills find it hard to stock their products due to supply chain disruptions.
Governments have their eye on these issues, which affect the entire global economy. In the US, the USDA along with state and federal partners is monitoring the situation and acting accordingly, while in Canada, the government is investing money to address these food supply shortages and promote resilience against future disruptions.
But these supply chain issues are in many ways unprecedented and to an extent unavoidable. What can food manufacturers do to secure against future risks and be more resilient? Let’s look at some of the ways that automation technology can change the game for large and small food manufacturers and provide footholds of security in very uncertain times.
High-Level Supplier Management Software: Staying Ahead of Food Supply Chain Issues
Food manufacturers are required by most jurisdictions to vett, certify, and track their suppliers (or vendors) in a systematic way for food safety reasons. The expectation in the new era of the globalized food supply is that food manufacturers must be able to track everything “one step forward, one step back” and be able to conduct vulnerability and threat assessments of their vendors.
This information is complex to track in the best of times, but in times of crisis or disaster being able to manage, switch, and maintain suppliers is critical. An automated vendor management system delivers the tools for smart manufacturers to stay one step ahead:
- Conduct vulnerability assessments and verify reliable vendors;
- Track on-time performance for suppliers;
- Stay on top of supplier certifications with automated reminders and tasks;
- Maintain the highest levels of quality and safety compliance while reducing operational costs;
- Automate safety and quality procedures, including health screening for employees, to reduce human error and improve efficiency;
- Seamlessly integrate supplier management with traceability systems for superior record keeping;
- Generate Certificates of Analysis at the click of a button for customers and regulators;
- Anticipate problems and make better decisions with data analytics and trending capabilities.
Planning and contingency plans allow food companies to take challenges in stride. A unified supplier management system allows manufacturers to easily line up back-up vendors while maintaining constant communication when needed.
[Vendor management] is a very strong feature of Icicle; not only does it give us information at our fingertips but it’s like a direct line to the vendor. Icicle makes it much easier. This is an area that could be very complex. […] I think this is an area that’s really adding value on our end.Patrick O’Sullivan, Plant Manager & Project Manager, Big Mountain Foods
Advanced Inventory Management: Maintaining Production Schedules
The last thing a food manufacturer wants is to be short on crucial ingredients, materials, packaging, or parts that are needed for production. Maintaining proper inventory levels, especially for larger operations, is a challenge in the best of times – and a nightmare when there are unforeseeable and immoveable supply chain disruptions, from a drought to a beached ship. In the complex global food supply chain, even small disruptions trickle down and manifest as empty grocery store shelves and lost profits.
With automated inventory management, you can manage these challenges:
- Access live inventory reporting;
- Utilize predictive capabilities for planned production, including projected costing, to ensure schedules are kept;
- Maximize shelf life with automated inventory management and picking in FIFO order;
- Prevent over-ordering and unexpected storage space shortages;
- Automate predictive purchasing (especially helpful during staffing shortages);
- Fully integrate with warehouse management (receiving and shipping, inventory management);
- Fully integrate with food safety, quality, and traceability requirements and standards.
A natural reaction to supply chain disruptions is to order in excess (also called safety stock) — a buffer to counter shortages or a sudden rise in demand. However, with supply chain disruptions, companies are still struggling to keep up with demand and stockpiling can compound shortages instead of alleviating them. In the food industry, where profit margins are already very tight, both under and overstocking can hit a company’s bottom line hard.
Icicle ERP’s automated inventory management helps companies manage inventory levels with precision and foresight. In the case of supply chain disruptions, you can look and plan ahead with Icicle’s help every step of the way. Preset maximum and minimum inventory thresholds help you manage storage space and keep production going as scheduled; the system even automatically sends purchasing suggestions to ensure you will meet your production schedule and booked sales orders. Integrated expiration management features help you ensure you’re using your inventory in the most efficient way, reducing production waste and improving shelf life.
An Example: A Small Food Processor Grows Exponentially in a Time of Disaster
One Icicle user that leveraged these features to maintain their production is the Alberta-based food processor Honest Dumplings. They use Icicle to not only develop and implement digitized HACCP (Hazard Analysis and Critical Control Points) plans, but also leverage Icicle’s strengths as an advanced inventory, production, and supplier management system.
Icicle enhanced Honest Dumpling’s supply chain management process by automating their entire food production system. That means that when they were hit with food supply chain logistics problems at the beginning of the COVID-19 pandemic, Honest Dumplings was able to keep track of all their necessary inventory levels with live reports and use detailed analytics to predict what they needed to keep their planned production schedule.
Having that cloud-based system, we were able to monitor our inventory and were able to jump on securing our meat supply as well as building inventory and raw ingredients to ensure that if there was a supply chain disruption, then we would be able to keep producing. Having that information through Icicle was very valuable.Chris Lerohl, CEO of Honest Dumplings
They were also able to manage their vendors through the automated system and prepare contingency plans accordingly. Integration of vendor management with inventory meant that they could even use their Icicle data to maintain good relationships with their suppliers. When Honest Dumplings caught spoilage in meat set for use in production, they reviewed their records, saw the proper temperatures were maintained in their refrigerators, and obtained a full refund from their supplier by showing their records. Automated supplier management that is integrated with other production systems like inventory, food safety, and more, helped Honest Dumplings thrive during the pandemic – and triple their business in just a few months.
When faced with new challenges such as growing their SKUs, vendor management, hiring, training staff, and keeping up with everything else that rapid growth entails, Icicle smoothed the transition. Icicle ERP helped increase operational efficiency, made communication easier, and allowed senior management to mitigate risks while expanding business to a larger production facility.
Together with the Uproot Food Collective, their team realized better margins for their products through raw material sourcing, production efficiencies and lower distribution costs. Honest Dumplings was doing so well that even as they scaled up their operations and transitioned to a new facility, they were able to pass their savings along to their customers too, announcing a price drop for their products in early 2022.
Whether it’s overcoming supply chain disruptions, maintaining records, increasing operational efficiency, bettering vendor management skills, or staying compliant — using advanced software such as Icicle will help food manufacturers stay resilient in trying times.